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Q3 Earnings Season in 3 Charts

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The stock market pullback that got underway roughly at the beginning of October has now pushed the major indexes into negative territory.  The S&P 500 index, which was up almost +10% this year through the end of September, is now down -1.3%. The Nasdaq composite is still holding onto some gains, with the Tech-heavy index up +1.2% in the year-to-date period through Tuesday’s close.

The chart below shows the year-to-date performances of the S&P 500, Nasdaq Composite and the Russell 2000 indexes.

As you can see in this chart, the Nasdaq composite was up almost +18% through early September, with the FANG sell-off hitting this index really hard.

Earnings Season Scorecard

Including last evening’s reports from the likes of Gap (GPS - Free Report) and Foot Locker (FL - Free Report) and this morning’s Deere (DE - Free Report) report, we now have Q3 results from 484 S&P 500 members or 96.8% of the index’s total membership. Total earnings for these companies are up +25.6% from the same period last year on +8.4% higher revenues, with 78.9% beating EPS estimates and 64.7% beating revenue estimates.

Below is the first of the three earnings season charts promised at the top that compares the Q3 results from these 484 index members with what we have been seeing from the same group of companies in other recent periods.

As you can see here, growth is very strong, though positive surprises haven’t been as numerous in Q3 as in other recent periods, particularly on the revenues front.

The chart below shows the blended Q4 growth rate for earnings and revenues in the context of where growth has been in recent quarters and what is expected in the coming periods.

As you can see here, Q3 earnings growth has reached the preceding quarter’s pace, which itself was the highest growth rate in almost 7 years. While growth is still expected to remain strong in the current period (2018 Q4) at +13.2%, it represents a material deceleration from what we experienced in the first three quarters of the year, with growth pace decelerating even further in 2019.

The chart below shows how expectations for the current period have evolved since the quarter got underway.

This is more negative revision than we saw ahead of the start of the first three quarters of the year, but otherwise in-line the historical trend of the last few years.

For more details about the Q3 earnings season, please check our weekly Earnings Trends report >>> How Strong is the Earnings Picture?

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